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One of the most important credit card habits is paying your balance on time and in full every month. But it’s also possible to overpay your balance, in which case your issuer owes you money.
When you overpay a credit card, it means you’ve paid more than the full amount due on your account. For example, if you have a balance of $100, but pay $200 instead, you’ve overpaid your credit card. This might happen if you've set up automatic payments and then also manually pay the amount due, or if you accidentally type in an extra digit when paying your balance.
The good news is that other than having a little less cash temporarily, there’s no penalty for overpaying a credit card. Plus, you’ll have a few options for getting back the amount you’re owed. Here’s what to know.
» LEARN:Benefits of paying more than the minimum on your credit card
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You’ll be credited for your overpayment
When you pay more than is due on an account, your credit line will reflect a negative balance. Taking the previous example, if you owe $100 on your account, but accidentally pay $200, your account will reflect a balance of -$100. In this scenario, a statement credit is automatically added to your account — as required by federal law — that will count toward any new purchases you make.
Once you’ve spent down the statement credit, your account balance will reflect your regular credit line.
You can request a refund
While you can choose to keep your overpayment as credit on your account, you also have the option of receiving a refund by making a request to your issuer. If a written request is made for a refund, your issuer is required by law to send you the amount owed within seven business days of the request.
The process of requesting an overpayment refund will vary widely by issuer, but it generally involves making a request first through the issuer’s website. For example, American Express notes on its site that holders can “request a refund for an overpayment” through their online account by selecting the "Open a Payment Dispute" tab and, from there, selecting "I have a credit balance on my account."
Note that if there’s any credit remaining on your account for more than six months and you haven’t made a request for a refund, your issuer is required to make a “good faith” effort to refund your money by cash, check, money order or as a deposit into an account.
» READ: Need a favor from a credit card issuer? Make a call
Large overpayments may be a problem
While you generally won’t be penalized for overpayments, there are instances when a large overpayment may look suspicious and subsequently considered credit card fraud. In such cases, you may be alerted of fraud or asked to verify your payment and identity. If you find yourself in this situation, you can contact your issuer by calling the number on the back of your credit card.
To avoid an overpayment, there are a few steps you can take:
Set up automatic payments: Setting up credit card autopay can help you avoid missing a payment. A missed payment can result in interest charges, late fees and a potential dip in your credit scores. Autopay can also help you avoid having to pay your bill manually and possibly making a mistake when doing so. You can usually set up autopay through your credit card account, online or through an app.
Check your card statement regularly: Going through your monthly credit card statements makes it easier to verify transactions you’ve made and stay up to date on how much you owe.
Set up account alerts: Credit card notifications — which are free to opt into — can alert you of things like when there’s a bill due, what your balance is or if you’re close to your credit limit, depending on what you sign up for. Cardholders can set up alerts by signing into their account online or through their issuer’s app.
» LEARN:How to dispute fraudulent credit card charges
Frequently asked questions
Is it bad to overpay your credit card?
You won’t be penalized for overpaying your credit card, but there are also no benefits for doing so. When you pay more than the balance due, your issuer should automatically issue the amount you’re owed as a statement credit and your credit line will reflect a negative balance until you’ve spent the credit.
Does having a negative balance hurt your credit?
A negative balance is not recorded as part of your payment or credit history and therefore does not have an impact on your score directly. However, if you have a negative balance because you’ve overpaid your credit card, your payment history will still reflect that you’ve paid your balance in full, which can positively impact your credit scores.
What happens if I go over my credit limit?
Going over your credit limit can result in some serious consequences: Your issuer can decline your transaction, cancel your card and/or lower your credit limit. Your credit scores can also be negatively impacted. In some rare cases though, your issuer may allow you to charge more than your credit limit if you’ve shown responsible card use.
Overpayments happen, so don't panic. You have options. Whether you decide to spend down the negative credit balance or request a refund, overpaying your credit card balance and carrying a negative balance won't hurt your credit score—and it won't help it either.
Wait it out. There's no penalty for overpaying your credit card. If the negative balance isn't significant and you use the card regularly, you can just spend the statement credit on purchases. Once you've spent it, you'll be using your regular credit line again.
The maximum amount that can be paid is for the posted balance in full. Pending transactions aren't included because the merchant hasn't collected their funds from the authorization yet. And overpayments aren't guaranteed to create excess available credit.
If you've overpaid by a small amount, there's no need to fret. You can use the balance towards your next month's spending. However, if the credit remains untouched for six months, your credit card company is legally required to make an effort to return that money to you.
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If you typically carry a balance on your credit card from one month to the next, then making multiple payments during each billing cycle can reduce your interest charges overall. That's because interest accrues based on your average daily balance during the billing period.
Contact your issuer and try requesting a refund for the amount paid over the minimum due. Credit card issuers make a profit when you run a balance, and that balance accrues interest, so it may be a win-win. Federal regulation requires creditors to follow up within seven business days of receiving the request.
A positive balance on your credit card, also called a credit balance, is an overpayment or refund on your card. It's an amount that belongs to you, so it's the opposite of an amount you owe. Your next purchases will simply be deducted from the positive balance until your balance drops to $0.
As an added bonus, you'll likely see your credit score improve and you'll have more available credit at your disposal. Even increasing your minimum payment by a small amount can significantly reduce the time it takes to pay off your balance and save your substantial money on interest.
Request a deposit: Check with your credit card issuer to see if you can request the negative balance amount to be deposited to your bank account. You can also ask for a check, money order or cash. Make a purchase: This is the easiest way to resolve a negative balance.
If you have paid your card down to a zero balance before receiving your refund, you will have a negative balance on your credit account — and any future purchases will be applied to the negative balance first.
Going over your credit limit usually does not immediately impact your credit, particularly if you pay down your balance to keep the account in good standing. However, an account that remains over its limit for a period of time could be declared delinquent, and the issuer could close the account.
So if you max out a credit card, your balance will go up. That, in turn, will likely raise your minimum monthly payment. Keep in mind that if you make only the minimum payment each month, it can drag out the time it takes to pay off your balance.
NerdWallet recommends the 50/30/20 budget, which suggests that 50% of your income goes toward needs, 30% toward wants and 20% toward savings and debt repayment. Monitor your credit, track your spending and see all of your finances together in a single place.
NerdWallet only pulls one credit score from TransUnion once a week, unlike Credit Karma, which gives you two scores updated daily. You can see the factors that go into your credit score, ranked from highest impact to lowest: payment history, credit utilization, age and mix of accounts, balances, and recent inquiries.
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Bank of America cardholders can get a credit balance refund in the form of a check. Note that you are not required to request a credit balance refund if you overpay your Bank of America credit card.
It is possible to use a credit card to transfer money into a bank account by using a cash advance or balance transfer check, but we can't recommend it. Cash advances are risky because of the high interest rates and costly one-time fees. Balance transfers can lead to more debt if they're not handled correctly.
You have two choices for making the overpayment go away: Ask for a refund. You might request a direct deposit to your bank account or a check. Continue to use the credit card until the surplus in your credit card account has been used up.
Your credit limit is the maximum amount of money a lender permits you to spend on a credit card or line of credit. Going over your credit card limit can result in consequences, including high fees, a drop in your credit score, and even the closure of your account.
Introduction: My name is Neely Ledner, I am a bright, determined, beautiful, adventurous, adventurous, spotless, calm person who loves writing and wants to share my knowledge and understanding with you.
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